UPDATE: Morgan Stanley Reiterates On Ally Financial As Prime Net Losses See Seasonal Uptick

In a report published Tuesday, Morgan Stanley analyst Betsy L. Graseck reiterated an Overweight rating on

, but removed the $40.00 price target. In the report, Morgan Stanley noted, “Recovery rates are moderating as expected, driving slightly higher ANLs m/m.Lower recovery rates are already embedded in our forecast and we do not change our view on 4Q credit as a result. October data showed a slightly higher than expected increase in ANLs on lower recoveries (up 11bps m/m to 0.32%), but the uptick was in-line with the increase in October 2013 (+12bps m/m). We look for continued moderation in recovery rates as used car pricing softens over the next couple of years, driving our view for credit costs moving back towards cycle average despite an improving economy /employment outlook. We forecast a consolidated auto NCO ratio of 1.00% for 4Q14.” Ally Financial closed on Monday at $23.47.